Central government & Local government

The mutual sector comprises voluntary organisations and other mutual bodies. The voluntary sector is made up of non-profit making organisations such as charities and youth groups. The majority of the staff of voluntary organisations is unpaid volunteers. Other mutual organisations such as cooperative societies and friendly societies are also non-profit making, but employ a significant number of paid staff. Charities are run by full-time professionals and supported by network of volunteers. There are more than 6,000 registered charities and voluntary organisations in the UK.

They are financed by collections; flag days, donations, bequests and trading activities. Company sponsorship is also important, providing support such as rent free accommodation, a minibus or the loan of a manager. The national lottery also makes awards to charities. The cooperative movement contains a diversity of businesses – covering agriculture, engineering, retail, banking etc. organised in industrial and provident societies. Its essential purpose was to create a social organisation to offer protection from unfair trading practices and poverty.

Its ultimate aim was to establish a commonwealth owning the means of product, distribution and exchange. The essential feature of this type of organisation is that it has limited liability, share are not transferable, membership is voluntary and open, limited rate of interest is paid on capital, and it is registered under the industrial and provident societies Acts 1965-78 and the companies Acts etc. traditional, retail societies paid members a dividend on purchases but modern societies may choose to pay dividend on purchases, issue trading stamps, pay interest on share account or issue special offer vouchers for members.

Friendly societies were formed for the purpose of encouraging and managing savings to provide assistance to their members in time of need. Governments offer tax advantages to encourage saving with friendly societies. Some building societies and mutual life insurance businesses are non-profit making. Mutual organisations have no shareholders and no owners. They operate solely in the interest of their members or consumers. Any surpluses they make are ploughed back into the organisation or paid to the members.

The process of mutual societies converting into public limited companies is termed as demutualisation. Proponents for demutualisation have argued that building societies and life assurance companies are old fashioned, bureaucratic and ill prepared to complete in the modern world. The public sector comprises all organisations that are owned by the state. Public sector organisations might be controlled by central or local government and include organisations such as the Post Office, the National Health Service, Universities and the few remaining nationalised industries.

Recent UK government have sold many parts of the public sector, with industries such as coal mining and railway now being owned and managed by private sector companies. The process of selling a public sector organisations and assets to individuals and businesses in the private sector are termed as privatisation. The privatisation programme is designed to raise large sums of money for the government allowing it to reduce tax rates, promote greater efficiency in industries. Central government comprises ministries and departments, which establish policies and administer public services.

Government activity has to be funded from taxation and other sources. It raises revenue from direct personal and corporate taxation, indirect taxes, sale of public assets, motor vehicle tax, national insurance contributions and national savings. The European Union may make some financial contributions, particularly to assist declining areas with employment creation projects. Local government is an important part of country's democratic structure. Councils and local authorities are responsible for education, social services, police, fire and many other local services within their own area.

Local government is funded by council tax, government grants, loans and revenue generated by charges for service. Quango stands for quasi-autonomous non-government organisation. The rationale for quangos is to provide some assistance to ministers and their departments in the formulation and application of policies. Anyone wishing to work on quangos can submit an application to the public appointments unit. The unit circulates a list to the various government departments responsible for the appointments.